Correlation Between Enel Chile and Barings BDC

Can any of the company-specific risk be diversified away by investing in both Enel Chile and Barings BDC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Enel Chile and Barings BDC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enel Chile SA and Barings BDC, you can compare the effects of market volatilities on Enel Chile and Barings BDC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Enel Chile with a short position of Barings BDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel Chile and Barings BDC.

Diversification Opportunities for Enel Chile and Barings BDC

-0.13

Correlation Coefficient

Enel Chile  Barings BDC

Good diversification

The 3 months correlation between Enel and Barings is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Enel Chile SA and Barings BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings BDC and Enel Chile is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Enel Chile SA are associated (or correlated) with Barings BDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings BDC has no effect on the direction of Enel Chile i.e., Enel Chile and Barings BDC go up and down completely randomly.

Pair Corralation between Enel Chile and Barings BDC

Given the investment horizon of 90 days Enel Chile SA is expected to generate 1.86 times more return on investment than Barings BDC. However, Enel Chile is 1.86 times more volatile than Barings BDC. It trades about 0.27 of its potential returns per unit of risk. Barings BDC is currently generating about -0.27 per unit of risk. If you would invest  271.00  in Enel Chile SA on September 26, 2024 and sell it today you would earn a total of  27.00  from holding Enel Chile SA or generate 9.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Enel Chile SA  vs.  Barings BDC

Enel Chile SA

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enel Chile SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Enel Chile may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Barings BDC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barings BDC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Barings BDC is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Enel Chile and Barings BDC

The main advantage of trading using opposite Enel Chile and Barings BDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel Chile position performs unexpectedly, Barings BDC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Barings BDC will offset losses from the drop in Barings BDC's long position.

The idea behind Enel Chile SA and Barings BDC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.